3 of 5
BACKNEXT
Watson
Investment: An estimated $900 million to $1.8 billion

Some famous IBM projects, like the chess-playing Deep Blue computer, are more about showing off what's possible than building a major revenue stream. But then there's Watson, perhaps IBM's most famous -- and expensive -- gamble.

Watson is an under-development computer program that understands normal human language so well that it can successfully play Jeopardy! The show's producers plan to feature Watson on TV soon, possibly as early as this fall.

IBM says this is no Garry Kasparov-beating gimmick. The company believes it has found the true Holy Grail of automated search: a computer that understands everyday human speech, and a system that it can sell to its clients.

"The future of Watson is to get it embedded in IBM's solutions and products to help customers deal effectively with unstructured content," says David Ferrucci, head of the Watson team at IBM.

If Watson can answer complex Jeopardy! questions, then perhaps it could help doctors treat patients, bankers mitigate risk or consumers plan a dinner menu at a grocery store, IBM theorizes.

IBM will not say how much it has spent on Watson and offers no timeline for when Watson-derived technology could be sold to businesses. But Richard Doherty, research director for the Envisioneering Group, which does some consulting for IBM, estimates that the project costs roughly 5% to 10% of IBM's entire $6 billion R&D budget each year. That puts Watson's three-year development price tag at roughly $900 million to $1.8 billion. He believes that Watson systems could start appearing in some businesses as early as next year.

But those buyers would need deep pockets: It takes a $1 million supercomputer simply to run Watson's software, before you even factor in the cost of licensing it.

NEXT: Tesla
Last updated August 26 2010: 12:40 PM ET
More Galleries
For sale: Steve McQueen's 1967 Ferrari The red 1967 sports car is expected to fetch millions at auction. More
The 13 most WTF gadgets From the weird to the gross, these 13 gadgets will make you wonder why they even exist. More
Best-loved cars in America These cars and trucks topped J.D. Power's APEAL survey, which measures how much owners like their new vehicles. More

Special Offer
Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.